Health Reform Rules Clarify Preventive Care Cost Sharing

Health care reform regulations issued Wednesday, July 14, by the Obama administration make clear that employers will be able to continue to impose cost-sharing requirements on preventive services that employees receive from out-of-network providers.

Under the new law, beginning January 1, employers with calendar-year plans will have to fully cover preventive services, such as screenings and immunizations, with no employee cost-sharing requirements. Grandfathered plans—those plans that do not, for example, ever increase co-insurance requirements or boost employee premium contributions by more than five percentage points—are exempt from the mandate to provide full coverage for preventive services.

But the law is unclear about whether the full-coverage mandate applies to preventive services delivered out of network. The new regulations end that uncertainty.

“This is very welcome news,” said Mike Thompson, a principal with PricewaterhouseCoopers in New York.

“This will help employers effectively comply with the new requirement,” said Rich Stover, a principal with Buck Consultants in Secaucus, New Jersey.

The regulations issued by the departments of Labor, Treasury, and Health and Human Services also make clear that regular cost-sharing requirements can be imposed on an office visit when a recommended preventive service is billed as a separate charge.

In addition, treatment resulting from a preventive service can be subject to cost-sharing requirements if the treatment is not itself a recommended preventive service.

Regulators estimate that the new requirements will increase group health care plans’ costs by an average of 1.5 percent a year.

PwC’s Thompson said, though, the cost impact will be much lower for employers that already provide coverage for many preventive services.

Down the road, the full-coverage mandate could lower costs if medical problems are spotted during preventive tests and screenings before they mushroom into expensive-to-treat conditions.

“We know that the best way to keep our families healthy and cut health care costs is to keep people from getting sick in the first place,” first lady Michelle Obama said in remarks prepared for the release of the regulations.